ESAB Corporation (ESAB) AI Stock Analysis

• Market Cap: $6.70B
• Dividend Yield: 0.31%
• Average Volume (3M): 469.20K
• Price to Earnings (P/E): 26.4
• Beta (1Y): 1.18
• Revenue Growth: -1.06%
• EPS Growth: 1.56%
• Country: US
• Employees: 8,000
• Sector: Industrials
• Sector Strength: 72
• Industry: Manufacturing - Metal Fabrication
• EPS (TTM): 1.36
• Shares Outstanding: 60,698,710
• 10 Day Avg. Volume: 546,739
• 30 Day Avg. Volume: 469,203
• PEG Ratio: 0.94
• Price to Book (P/B): 4.10
• Price to Sales (P/S): 2.64
• P/FCF Ratio: 23.87
• Enterprise Value/Market Cap: 1.29
• Enterprise Value/Revenue: 3.16
• Enterprise Value/Gross Profit: 8.36
• Enterprise Value/Ebitda: 16.51
• 1Y Price Target: $135.86
• Price Target Upside: 22.62% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 7

• Rating: 70 Neutral
• Price Target: $121.00 ▲(9.21% Upside)

ESAB's strong financial performance and positive earnings call sentiment are significant strengths, indicating solid growth potential. However, bearish technical indicators and high valuation metrics suggest caution. The company's strategic acquisitions support long-term growth, but immediate market conditions may pose challenges.

Positive Factors

Strategic Acquisitions

Strategic acquisitions like DeltaP, Aktiv, and EWM enhance ESAB's capabilities and product offerings, supporting long-term growth and market expansion.

Record EBITDA Margins

Record EBITDA margins demonstrate operational efficiency and a strong business model, contributing to sustainable profitability and competitive advantage.

Raised Guidance

Raising full-year guidance reflects management's confidence in future growth, driven by strong product demand and strategic initiatives.

Negative Factors

Cash Flow Challenges

Declining free cash flow growth indicates potential liquidity issues, which could limit investment in growth opportunities and affect financial stability.

Tariff-Related Headwinds

Tariff-related challenges in Mexico create market uncertainties, potentially affecting sales and delaying strategic initiatives in the region.

Rising Debt Levels

Rising debt levels can strain financial resources, limiting flexibility and increasing risk if economic conditions worsen or cash flows decline.

ESAB Corporation Business Overview & Revenue Model

Company Description

ESAB Corporation formulates, develops, manufactures, and supplies consumable products and equipment for use in cutting, joining, and automated welding, as well as gas control equipment. Its comprehensive range of welding consumables includes electrodes, cored and solid wires, and fluxes using a range of specialty and other materials; and cutting consumables, including electrodes, nozzles, shields, and tips. The company's fabrication technology equipment ranges from portable welding machines to large customized automated cutting and welding systems. It also offers a range of digital software and solutions to help its customers increase their productivity, remotely monitor their welding operations, and digitize their documentation. The company sells its products under the ESAB brand to various end markets, including general industry, construction, infrastructure, transportation, energy, renewable energy, and medical and life sciences. It offers its products through independent distributors and direct salespeople. ESAB Corporation was incorporated in 2021 and is based in Wilmington, Delaware.

How the Company Makes Money

ESAB generates revenue through multiple streams, primarily from the sale of welding consumables and equipment. The company's revenue model is built on a combination of direct sales to end-users, distribution partnerships, and service contracts. Key revenue streams include the sale of welding wires, rods, and electrodes, as well as cutting machines and automation systems. Additionally, ESAB benefits from recurring revenue through maintenance services and parts replacement. Strategic partnerships with distributors and collaborations with industry leaders further enhance its market reach and contribute to its earnings. The company also invests in research and development to innovate and expand its product offerings, which helps to drive sales growth and maintain competitive advantage in the market.

ESAB Corporation Financial Statement Overview

Summary

ESAB Corporation exhibits strong revenue growth and profitability, supported by healthy margins. The balance sheet is stable with a reasonable debt level, though increasing debt warrants attention. Cash flow management requires improvement, particularly in free cash flow generation. Overall, the company is in a solid financial position but should address cash flow challenges to sustain growth.

Income Statement

ESAB Corporation demonstrates strong revenue growth with a 31.3% increase in the TTM period. The company maintains healthy profit margins, with a gross profit margin of 37.7% and a net profit margin of 9.98%. EBIT and EBITDA margins are also robust at 12.56% and 17.62%, respectively. However, the slight decline in revenue in the previous annual period indicates potential volatility.

Balance Sheet

The balance sheet reflects a stable financial position with a manageable debt-to-equity ratio of 0.61. Return on equity is solid at 13.51%, indicating efficient use of equity. The equity ratio stands at 46.7%, suggesting a balanced capital structure. However, the increase in total debt over the years could pose a risk if not managed carefully.

Cash Flow

Cash flow analysis shows a decline in free cash flow growth by 12.4% in the TTM period, which is a concern. The operating cash flow to net income ratio is moderate at 0.52, and the free cash flow to net income ratio is strong at 0.85, indicating good cash conversion. The company needs to focus on improving free cash flow generation.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	2.74B	2.74B	2.77B	2.59B	2.43B	1.95B
Gross Profit	1.03B	1.04B	1.02B	885.53M	837.98M	682.47M
EBITDA	523.45M	531.41M	509.37M	435.40M	404.83M	299.25M
Net Income	256.23M	264.84M	205.28M	223.75M	235.11M	157.41M
Balance Sheet
Total Assets	4.43B	4.03B	3.83B	3.75B	3.46B	3.39B
Cash, Cash Equivalents and Short-Term Investments	258.22M	249.36M	102.00M	72.02M	41.21M	49.21M
Total Debt	1.17B	1.16B	1.12B	1.31B	109.24M	97.04M
Total Liabilities	2.32B	2.23B	2.18B	2.37B	959.53M	841.06M
Stockholders Equity	2.07B	1.77B	1.61B	1.35B	2.46B	2.50B
Cash Flow
Free Cash Flow	258.14M	303.62M	282.32M	174.12M	215.15M	269.04M
Operating Cash Flow	309.95M	355.40M	330.49M	214.36M	250.74M	309.18M
Investing Cash Flow	-267.25M	-205.70M	-62.24M	-184.42M	-35.27M	-34.57M
Financing Cash Flow	-34.26M	31.67M	-219.72M	7.56M	-221.57M	-326.42M

ESAB Corporation Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 110.80
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ESAB, the sentiment is Negative. The current price of 110.8 is below the 20-day moving average (MA) of 113.88, below the 50-day MA of 119.22, and below the 200-day MA of 121.35, indicating a bearish trend. The MACD of -2.34 indicates Positive momentum. The RSI at 40.45 is Neutral, neither overbought nor oversold. The STOCH value of 24.69 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ESAB.

ESAB Corporation Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MLI	81 Outperform	11.18B	15.82	0.00%	0.94%	19.42%	30.15%
AZZ	80 Outperform	3.44B	13.22	21.42%	0.62%	1.70%	684.20%
ATI	74 Outperform	11.01B	27.61	23.95%	―	6.64%	3.23%
CRS	73 Outperform	12.10B	32.36	19.93%	0.33%	4.25%	100.21%
ESAB	70 Neutral	$6.70B	26.40	14.81%	0.31%	-1.06%	1.56%
WOR	64 Neutral	3.04B	31.87	10.25%	1.15%	-60.43%	-14.19%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%

ESAB Corporation Corporate Events

ESAB Corporation to Acquire EWM GmbH for €275 Million

On June 26, 2025, ESAB Corporation announced its agreement to acquire EWM GmbH, a German leader in heavy industrial welding equipment and advanced automation, for approximately €275 million. This acquisition, expected to close in the second half of 2025, aims to strengthen ESAB’s technological capabilities and market reach, particularly in North America, while aligning with its strategic and financial objectives. The acquisition is anticipated to be accretive to earnings and is expected to enhance ESAB’s growth and margin expansion, leveraging the ESAB Business System.